By Carla Mozee and Victor Reklaitis, MarketWatch
U.K. stocks rise as pound gets slammed
European stocks on Monday closed lower for a fifth straight
session, after French utility Electricite de France SA issued a
profit warning, and on concerns about Brexit weighing on growth
prospects for the eurozone.
Markets also appeared rattled by uncertainty surrounding
progress for a cut in U.S. taxes.
What markets are doing: The Stoxx Europe 600 fell 0.7% to end at
386.13 for its lowest close since Sept. 27, according to FactSet
data. On Friday, the regional benchmark fell 0.4%
(http://www.marketwatch.com/story/european-stocks-veer-toward-worst-week-since-august-2017-11-10)
and closed out last week by falling 1.8%, the biggest weekly
percentage loss in three months.
France's CAC 40 gave up 0.7% to end at 5,341.63, and Germany's
DAX 30 index slipped 0.4% to finish at 13,074.42.
The U.K.'s FTSE 100 on Monday fell 0.2% to end at 7,415.18.
The euro traded at $1.1657, down slightly from $1.1665 late
Friday in New York. Against the pound, the shared currency fetched
GBP0.8901, up from GBP0.8843 on Friday.
Read:Is British leader Theresa May on her way out? Why that's
the fear--and why it matters
(http://www.marketwatch.com/story/is-british-leader-theresa-may-on-her-way-out-why-thats-the-fear-and-why-it-matters-2017-11-09)
What's moving markets: Investors are beginning to wrap up the
European earnings season. Per-share earnings in the third quarter
have modestly beaten expectations, while sales have been weaker
than earnings because of currency moves, said Morgan Stanley, which
issued its final earnings monitor for season on Monday.
"How long can markets keep rallying on that? Especially when we
seem to be in a global cycle of potentially pulling back on
liquidity," by central banks, said Kathleen Brooks, research
director at City Index, in a telephone interview.
Investors monitored broad-based gains for the euro, which can
clip sales for European exporters in overseas markets and, in turn,
pressure shares in those companies.
The pound dropped against the dollar, the euro and other
currencies, although it was off session lows. Sterling fell after
The Sunday Times reported
(https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwjJwKegh7vXAhVD2KQKHX25AqkQqUMILDAB&url=https%3A%2F%2Fwww.thetimes.co.uk%2Farticle%2Ftory-turmoil-as-40-mps-say-may-must-go-kkg3w6l89&usg=AOvVaw0P3ydYgZ0X_1ThNri40pNZ)
that 40 lawmakers in the British parliament had agreed to sign a
letter of no confidence in Prime Minister Theresa May. That's eight
shy required to start a formal leadership challenge, according to
the report. May's troubles on the domestic front make it more
difficult for her to fortify the U.K.'s hand in Brexit talks with
the European Union, analysts have said.
Check out:Is British leader Theresa May on her way out? Why
that's the fear--and why it matters
(http://www.marketwatch.com/story/is-british-leader-theresa-may-on-her-way-out-why-thats-the-fear-and-why-it-matters-2017-11-09)
Opinion:Brexit hard-liners are selling England by the pound
(http://www.marketwatch.com/story/brexit-hardliners-are-selling-england-by-the-pound-2017-11-09)
The eurozone economy would suffer along with the U.K.'s if
there's a "disruptive" Brexit, an official at the International
Monetary Fund told Reuters on Monday.
(https://uk.reuters.com/article/uk-britain-eu-imf/imf-says-europes-growth-more-durable-warns-of-disruptive-brexit-threat-idUKKBN1DD0WZ)
(https://uk.reuters.com/article/uk-britain-eu-imf/imf-says-europes-growth-more-durable-warns-of-disruptive-brexit-threat-idUKKBN1DD0WZ)Adding
to overall pessimism in both U.S. and European markets was
uncertainty surrounding prospects for Republican lawmakers to pass
tax cuts and other reforms into law by the end of this year, said
City Index's Brooks.
"There was a lot of expectation going into this week that would
be see a big development in the U.S. tax reform [process]. When
Europe came in today, they wanted to know something and they
haven't had any information," she said. That prompted traders to
say, "That's it. Right. Sell," she said.
Financial shares were among the worst performing on Monday in
Europe, likely because of worries about tax reform, said
Brooks.
She also noted that over the past three sessions, Wall Street's
so-called fear index has climbed to levels not seen since early
September.
"The last time we spiked significantly above 12, we spiked to 16
in August when we saw that fear about the Trump trade," ramp up,
said Brooks. "I think that's maybe starting to build again."
Stock movers: EDF (EDF.FR) tumbled 10% after the company cut its
2018 Ebitda target
(http://www.marketwatch.com/story/edf-shares-tumble-after-company-cuts-guidance-2017-11-13)
to a range of EUR14.6 billion to EUR15.3 billion, compared with a
previous forecast of at least EUR15.2 billion. EDF said it faces
"unfavorable developments" in France and the U.K. The shares were
facing their worst decline since December 2016.
Sonova Holding AG (SOON.EB) slid 2.4% after the hearing aid
producer said first-half sales came in at 1.25 billion Swiss
francs, which was below a Reuters consensus forecast of 1.29
billion francs.
Coca-Cola HBC shares fell 4.5%. The bottler's rating was cut to
neutral from overweight at J.P. Morgan Cazenove, according to Dow
Jones Newswires.
Aggreko PLC (AGK.LN) rose 1.8% after the power-equipment
supplier named Heath Drewett as its chief financial officer
(http://www.marketwatch.com/story/aggreko-appoints-heath-drewett-as-cfo-2017-11-13).
(END) Dow Jones Newswires
November 13, 2017 12:42 ET (17:42 GMT)
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